WOOF! Newsletter

March 08, 2018

The Net Neutrality War: Private Enterprise vs. Government Bureaucracy

The FCC has rolled back the power of government to control the Internet. States and big tech companies want to reinstitute "Net Neutrality." But they're missing something important about private enterprise vs. government bureaucracy.

On February 22 of 2018, FCC Chairman Ajit Pai finalized the repeal of the Telecommunications Act classifications for the Internet enacted in 2015. Commonly referred to as "Net Neutrality," this changed the government's regulatory approach to the Internet from heavy handed to light-touch.

What States Fear Will Happen

Net Neutrality supporters claim Internet Service Providers will begin slowing down certain traffic on their networks, unless people pay more. They insist that Net Neutrality stops this from happening.

Does it? Let's look at the definition of Net Neutrality in the now-defunct classification:

"…the principle that governments should mandate Internet service providers to treat all data on the Internet the same, and not discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication."

It appears so, by invoking government oversight/control. This is important—the key words in the definition are, "Governments should mandate." We'll come back to that.

States like New York and Washington, as well as several Internet companies & state Attorneys General have filed suit against the FCC, demanding a reinstatement of "Net Neutrality." The media champions these efforts.

Only 5 days after the repeal, Senator Ed Markey (D-MA) introduced a measure to overturn the FCC's action at the Congressional level. It's missing one Senate vote to pass, and go to the House. This means all branches of government are now involved in the back-and-forth.

But there's one problem.

The Wrench in the Works: "Net Neutrality" is a Misnomer

The term "Net Neutrality" was always a misnomer. The Net already had a "neutral" status prior to the 2015 classification…because of the Telecommunications Act of 1996!

Congress at the time adopted a "light-touch" approach. Essentially letting the free market work it out. As a result, the Internet exploded worldwide.

The "Net Neutrality" changes in 2015 increased the ability of the U.S. Government to control the Internet. The rollback reinstates the pre-2015 regulatory approach. Going back to a light touch. Nothing more.

The government can still take steps to enforce privacy and overreach by ISPs like AT&T and Comcast. For example, if ISPs tried to charge Netflix extra for high-speed access, the government still has the power to stop it. But the government can't expressly force ISPs to, say, build extra capacity at a financial loss.

It comes down to: Which do you want "in charge" of the Internet? One government after power, or a multitude of businesses after profit? The businesses must at least deliver a product to profit. The government doesn't have to do anything.

Think of it like this. Would you want the Internet run like the DMV? Or worse yet, like Congress?

Guess what AT&T and Comcast, two companies "Net Neutrality" sought to control, are doing now? They're running new fiber lines as fast as they can. Now that the government has a light touch approach to their operations again, it benefits them to activate as much fiber-based Internet as possible.

Both have lowered the TCO of Fiber Internet to the end customer over the past few years. More rate changes are coming up. It all adds up to faster Internet for everyone, in a broader area, at cheaper rates. That's the free market at work.

So the ISP side isn't slowing things down. What about major Internet services?

Just last month, Twitter was caught censoring users for political purposes. Would "Net Neutrality" have stopped this? No. Services like Twitter are not ISPs, and as such, never fell under "Net Neutrality" provisions. In fact, they don't have many legal restrictions on them at all.

(In principle, they should not have many legal restrictions on them…so long as they operate AS a business, and not a political entity.)

This activity should worry Internet advocates more than the Net Neutrality repeal. It's active opposition to free speech – the core principle they claim to defend!

Since Net Neutrality is Gone (For Now), Businesses Have the Freedom to Grow. It May Not Last.

*Please Note: This issue is ongoing. No one knows what will happen in the end…at least not yet!

States do have the right to institute "neutrality" protections within their borders. At the same time, ISPs have the right to limit their investment in those states, or even pull out completely. This is the market at work. This is how the Internet grew so fast in the 2000s…and hopefully will again.

The best advice we could give is: Do your best work, invest where it makes sense, and focus on delivering a great product. The fight for "Net Neutrality" isn't over yet. But no matter how it turns out, we'll still have a powerful worldwide Internet.